Wash. Post still reporting GOP attacks over bonuses while ignoring IG testimony implicating Bush administration
Posted in Main Blog (All Posts) on March 23rd, 2009 4:51 am by HL
In a March 22 Washington Post article, staff writers Michael D. Shear and Paul Kane wrote that “Republicans have seized on the AIG issue in the belief that it has the potential to link Obama more closely to the widely unpopular $700 billion bailout legislation for the financial sector — legislation that was crafted in the Bush administration.” Shear and Kane went on to report Sen. John Cornyn (R-TX) saying of the Obama administration: “They’re in charge. … This could be a game changer in one sense. It’s tapped into the populist outrage.” However, Shear and Kane did not note that, as Media Matters for America has documented, Neil Barofsky, a Bush-appointed special inspector general for the Troubled Asset Relief Program (TARP), stated in March 19 congressional testimony that the Bush administration Treasury Department knew about the AIG bonus contracts and did not insist on their abrogation as a condition of AIG’s receiving bailout money through a stock purchase agreement signed by AIG and the Bush Treasury Department.
Previously, the Post reported on March 20 that after Congress’ move to “levy punitive taxes on bonuses paid by financial firms receiving government aid,” the “Republicans voiced strong objections to the tax approach, calling it a smokescreen for the [Obama] administration’s faulty oversight of the Troubled Assets Relief Program.” The article quoted Sen. Jon Kyl (R-AZ) as saying, “It sounds to me like these guys are trying to cover their tracks,” and also reported: “Eager to blame Democrats as not preventing the bonuses, GOP lawmakers pointed to a last-minute tweak last month to the $787 billion stimulus package that allowed for bonuses that were signed in contracts before Feb. 11.” However, according to a Media Matters search*, the Post has yet to report on Barofsky’s testimony about the negotiations of the stock purchase agreement.
In prepared testimony for a March 19 House Ways and Means Committee hearing, Barofsky stated, “Preliminary information we have seen indicates that the TARP contract between AIG and Treasury that was entered into back in November specifically contemplated the payment of bonuses and retention payments to AIG employees, including AIG’s Senior Partners.” He also stated that his office “will be reviewing the process at Treasury with respect to Treasury’s decision to authorize and approve such payments, both at the time it entered into the contract with AIG and since that time.” During an exchange with Rep. Peter Roskam (R-IL) in the hearing, Barofsky explained that in AIG’s November 2008 agreement with the Bush Treasury Department, “retention payments were explicitly contemplated.” From the testimony (transcript retrieved from the Nexis database):
REP. ROSKAM: You mentioned the online aspect of the disclosure of the TARP agreements. Would those online disclosures, as they’re currently exercised by Treasury, would they have revealed the AIG problem?
MR. BAROFSKY: It would have revealed that in the AIG agreement with Treasury, retention payments were explicitly contemplated. It didn’t list the contracts; it didn’t list the amounts, but in the executive compensation provisions, there’s an explicit reference to retention payments in calculating the total amount of payment a senior executive could receive. So that issue was, in fact, in those agreements.
REP. ROSKAM: So is it fair to say that if they had been online, that issue would have been red flagged and certainly drawn attention in advance to the problem?
MR. BAROFSKY: Potentially. I’m not sure of the exact date that the AIG agreement did go up on the Internet. Our recommendation was sort of adopted in waves after it was made in late December and is now being fully complied with. But I’m not sure the exact date the AIG agreement went up.
REP. ROSKAM: I understand.
Thank you. I yield back.
Indeed, the executive compensation section of the Bush Treasury Department’s November 2008 TARP agreement with AIG addresses the “annual bonus for 2009” for “Senior Partners,” including “all retention payments paid or payable to such Senior Partner under any retention arrangement between the Senior Partner and the Company for any period ending on or prior to March 31, 2010.” The section states that such bonuses “shall not exceed 3.5 times the sum of such Senior Partner’s base salary and target annual bonus for 2008” and does not mention retention payments for other AIG employees.
A graphic accompanying the March 22 article in the print edition of the Post reported that in “[m]id-October,” “Treasury and Fed officials beg[a]n directly dealing with AIG compensation issues” and that on November 11, “AIG reveal[ed] Financial Products bonuses in its third-quarter filings for the first time.” But like the article, the graphic did not note Barofsky’s testimony or mention the executive compensation provision in the November 2008 TARP agreement between Bush’s Treasury Department and AIG.
From the March 22 Post article:
In his weekly radio and Internet address yesterday, Obama made no mention of the AIG bonus scandal, choosing instead to use the forum to urge lawmakers to pass his budget. He plans to do the same at his second prime-time news conference Tuesday night.
His call on Congress to take up “the important work of debating this budget” is unlikely to do much to shift the political conversation away from where it has been for seven days.
Even as the president left Washington mid-week for town hall meetings on the budget and an appearance on “The Tonight Show With Jay Leno,” his Treasury secretary became the whipping boy for congressional anger as lawmakers proceeded to draft legislation aimed at punishing AIG executives for the bonuses.
“Quite simply, the Timothy Geithner experience has been a disaster,” Rep. Connie Mack (R-Fla.) said Tuesday in calling for the secretary’s resignation.
The AIG controversy has prompted Republicans to more directly attack Obama than at any time since he took office. At a Thursday session with reporters, Senate GOP leaders personally mocked him as a dilettante president, busy making lighthearted appearances on television, even talking about college basketball on ABC’s “Good Morning America.”
“He’s even found time to fill out his NCAA bracket,” Sen. Lamar Alexander (R-Tenn.) said.
[…]
Republicans have seized on the AIG issue in the belief that it has the potential to link Obama more closely to the widely unpopular $700 billion bailout legislation for the financial sector — legislation that was crafted in the Bush administration.
“They’re in charge,” Sen. John Cornyn (Tex.), chairman of the National Republican Senatorial Committee, said of the Obama administration. “This could be a game changer in one sense. It’s tapped into the populist outrage.”
* Nexis search of Washington Post database was “(Barofsky or inspector general or November) and (AIG or bonus! or retention or (contract or agree!)) and date aft 3/18/2009”
